Clash of the regional councillors
Bad blood between Mayor Augustyn and Barrick on Pelham finances
Pelham Mayor Dave Augustyn wants Port Colborne regional Coun. David Barrick to explain himself.
Augustyn will “invite” Barrick to Pelham to discuss his motion, made at regional council last week, that accuses Pelham of questionable financial practices — which threaten Niagara Region’s credit rating.
Augustyn says the motion is bunk.
“We have shown categorically that their Chicken Little worrying about the sky is falling has no merit,” Augustyn said.
“You need to do your homework before you make allegations. It’s important to go back to source documents, to talk to the authors. We have, and we have addressed each and every allegation in the motion — and refuted them.”
Barrick’s motion accused Pelham of conducting land transactions using a development charge scheme that does not accurately reflect its true debt levels in a transparent manner.
The motion also said Pelham’s debt threatened the Region’s Standard & Poors credit rating. The Region underwrites the debt for Niagara’s 12 municipalities.
Regional council voted Thursday night to defer Barrick’s motion to a June 11 audit committee meeting. The deferral ended the debate before Augustyn had a chance to table the Town of Pelham’s thick report addressing the issues raised in the motion.
Augustyn said the town is also extending its invitation to Niagara Falls Coun. Bob Gale, Grimsby Coun. Tony Quirk and Regional Chair Alan Caslin to join Barrick in Pelham.
Barrick is the head of the Region’s budget committee.
Gale seconded the motion. Quirk is the chairman of the Region’s audit committee and criticized Pelham’s response at regional council last week.
“We are going to invite them to come to town council and explain what happened — and why they have concerns,” Augustyn said.
“We are taking the allegations very seriously.”
Monday night, Pelham council took a detailed look at its own 338page report town staff put together to address the issues. The report has tabs for each allegation and is packed with supporting documentation.
Pelham is also planning a town hall style meeting to allay any fears the motion might have caused among residents.
“We recognize that the community may have concerns as a result of what I call the motion’s fear-mongering,” Augustyn said. “We are going to go out to the community and explain what is going on.”
Barrick said Pelham’s fiscal situation has led to a “loss of public trust” in the town’s ability to manage taxpayers’ money.
“I find it disappointing that some reporters are more interested — and willing — to write stories that fit their point of view, rather than giving readers a balanced story,” Barrick said in an email response to The Standard. “My constituents know I do my homework. I have been doing this for over a decade and my record as regional budget chair reflects that.
“The response by Pelham town council when presented with their own facts is disappointing to say the least.
“They have pieced together an incomplete 338-page document that conveniently fails to include the basics such as the internal control letter and management responses to the audited financial statements.
“Council’s attempt to discredit me personally is shameful and a clever distraction from their abysmal financial picture. No wonder Pelham residents are contacting me, when this is how they are treated when questioning their elected officials.”
Barrick didn’t respond to a question about the number of Pelham residents who have contacted him about their concerns.
He also didn’t respond directly to a question about whether he would take Pelham up on its offer — or about his homework on the internal control letter.
Auditors issue an internal control letter when there are problems found in financial statements. Augustyn has said previously that no problems were found — and no internal control letter was written.
The bedroom community of 17,000 is in the process of a significant residential and commercial expansion, much of it taking place along the Regional Road 20 corridor.
One of the centrepieces will be $36-million community centre, which will include two ice pads and replace Pelham’s crumbling arena, which is almost 50 years old.
One wall of the arena is buttressed with steel because building inspectors feared it might collapse. The aging iceplant struggles to keep the rink playable when the weather warms.
Town of Pelham staff contacted Standard & Poors about the potential impact on the Region’s debt situation.
The report said staff talked to Hector Cendano and Dina Shills, the authors of the Standard & Poors report on Niagara’s debt. The Standard & Poors report was issued on Jan. 23, 2017.
It said Pelham has a debenture forecast of $21.2 million for the community centre. Standard & Poors warned the town may need additional funds in 2019 for the project.
“We will be fine,” Augustyn said. “The treasurer explained that the interest and principle payments will be made out of interest earned on other investments.”
Even if a worst-case scenario develops, Augustyn said it won’t affect the Region’s credit rating.
A deeper look at the Region’s finances reveals Niagara is at an 85 per cent debt-to-operating-revenue ratio, a key statistic Standard & Poors uses in determining its ratings.
The Region’s debt currently is in the $680-million range.
Pelham might need an additional $10 million or $12 million if its financing plans go south. That addition to the Region’s debt would change the ratio from 85 per cent to 86 per cent.
The Region’s credit rating wouldn’t be seriously affected until the ratio reached 120 per cent.
Looked at another way, Niagara Region would have to add about $270 million in debt before the rating would be in real jeopardy.
“I had no indication from any of them that this was going be a problem for the Region,” Augustyn said.
“I wished we had a conversation about it before the motion came to regional council. We could have gone through it and corrected them, and they would not have been embarrassed as I think they are now.”
Barrick told regional council his motion was intended to bring clarity to concerned residents and identify a problem before it becomes an issue.
“I don’t believe the motion has any place at the Region,” said St. Catharines Coun. Tim Rigby, himself a former mayor. “We issue the debt because by bundling it together, we get a better rate than a municipality could do on its own.
“One of the reasons we have a Region is so we can take advantage of opportunities like that.
“I don’ t know where this came from, although I have suspicions. The best thing we could do at the time was defer it until we can have a better look at it.”
Welland Mayor Frank Campion wasn’t impressed either.
He said the lower-tier municipalities have defined jurisdictions, independent of the Region.
“Certain things belong at the city or town level,” he said. “Certain things belong at the regional level. If you start crossing over, it will just cause more confusion and work.
“In my mind, if there are issues with Pelham — and I’m not saying there are — then it is an issue for Pelham.
“I would not appreciate if the Region started to step into my business.
“Barrick can make that motion and bring it forward, and there are some interesting things in it, but by and large, they are issues that need to be dealt with at the local level.
“In the end, the voters in Pelham will decide.”
St. Catharines Coun. Andy Petrowski takes a different tack. At last week’s regional council meeting after the motion was deferred, Petrowski followed a group of Pelham residents into the hallway and spoke with them.
He expressed his concerns at the time about Pelham’s debt situation, something he reiterated Tuesday.
“As vice-chair of the audit committee, I commend council for agreeing to refer the Pelham tax-and-borrow motion to our committee. Based on the large turnout of concerned Pelham residents at last week’s regional council meeting, I am fully supportive of conducting a thorough review of Pelham’s massive debt exposure, and the ensuing skyrocketing tax consequences.”
Aside from financial concerns, there are two theories being floated in political circles about the motivation behind Barrick’s motion.
The first theory is that it is an attempt to distract people from the troubles at Niagara Peninsula Conservation Authority.
Augustyn has been vocal in calling for an audit of the organization.
Augustyn referenced that theory in a statement that was circulated when he first learned of Barrick’s motion on Monday, March 27.
“Aside from the motion being riddled with errors and misrepresentations, the motion is clearly a politically motivated attack on the Town of Pelham because of council’s strong stand with other Niagara municipalities over significant financial and governance concerns with the Niagara Peninsula Conservation Authority (where Mr. Barrick has worked since being hired from that board in 2013),” Augustyn wrote.
Barrick was hired and given a top senior staff position at the conservation authority — despite being a politician with no experience in running the day-to-day operations at the agency, which has a $12-million-a-year budget.
For more than a year, the conservation authority has been dogged with accusations of questionable practices and conflicts of interest. After initially stonewalling, it relented and is conducting an operational and forensic audit.
At regional council, Barrick responded and said “any mention of any other issue not related to this is a cheap excuse and a deflection about the issue.”
The second theory is that Augustyn may become a candidate for regional chairman in the next election. The motion is an effort to derail his candidacy before the race even begins.
Rigby referred to Augustyn’s possible political ambitions obliquely.
“It may have something to with a political future,” Rigby said when speculating about the motivation behind Barrick’s motion.
That’s all he would allow himself to say.
Augustyn wouldn’t speculate on the motivation behind the motion.
“We are trying to take the high road,” he said.
“You will have to ask them. We have big things going on here in Pelham. That is what I’m focused on.
“On the personal front, I haven’t looked ahead to next year. We are building the community centre. We want to deliver it on time and on budget. We are working to improve our community and make it walkable, cycle-able and a place people want to live.
“All the rest of this is a distraction.”